Retailers have been looking for new ways to reduce their labor requirements over the last years. This is especially true for grocery stores, which often have higher labor costs and very tight margins. Self checkouts are one way to reduce labor costs, but self checkout security is lacking.
This article gives you tips on how to prevent self checkout theft and fraud.
Point of sale (POS) systems are sometimes referred to as “point of theft” systems because they are often the center of theft rings. This is especially true for self checkouts.
Self checkouts, sometimes called kiosks, are special POS systems that are operated by the shopper directly. This can help increase the number of customers who can be served per hour as well as decrease the labor costs associated with service staff. However, it can also lead to even more opportunities for theft, which is why self checkouts have greater POS security requirements.
How much shrink do grocers experience?
Shrinkage is another name for loss, or the amount of money, inventory, etc. lost by a company due to theft, spoilage, waster, and other non-productive ends. All retailers seek to minimize their shrink because it is a drag on their profit margins.
This is especially true for grocery stores. That’s because grocers have some of the lowest margins of any industry. Grocery store margins are estimated to be approximately 2.5% on average, which is less than a third of the average retailer.
One reason for this is that grocers have notoriously high shrink, with most estimates putting it around 2–3%. Products not being sold by their best before date is one source of shrink for grocers. However, internal and external theft tend to be even bigger factors.
What are the sources of shrink in a grocery store?
Grocers have three main sources of shrinkage:
- Perishable waste
- Internal theft
- External theft
Perishable waste
Grocery stores are bound to lose some of their produce, meat, and dairy products to wastage. However, almost everything on a grocer’s shelf has an expiration date. That means everything from potato chips to canned goods can become waste. It’s important to train employees in proper food handling procedures to minimize the amount of wastage.
You can also rotate shelf space based on the heat maps generated in Solink. That way you can push older inventory into busier parts of your grocery store to sell them before they can no longer be sold.
Internal theft
Internal theft, or employee theft, is often the main source of loss for businesses. The reality is that decent people may still steal from their employer if the right opportunity and motivation exist.
While some internal theft is the direct theft of cash or inventory, much of it takes the form of more subtle types of fraud. For example, discount abuse is improperly using employee or other discounts to make products cheaper for friends and family. Thankfully, Solink pairs data from your POS with your video surveillance system to help you track down discount abuse
To see how Solink can help reduce discount abuse in your grocery store, sign up for a demo today.
External theft
External theft is any theft that comes from people outside of an organization. The most typical type of external theft is shoplifting. The following are the top shoplifted items in grocery stores:
- Cheese
- Fresh meat
- Chocolate
- Alcohol
- Seafood
- Infant formula
- Laundry detergent
- Personal care items such as razors and teeth whitening kits
Beyond shoplifting, external theft includes self checkout theft and fraud. Here are some general ways to prevent external theft.
Let’s take a closer look at self checkout theft and fraud.
How common is self checkout theft and fraud?
Self checkout theft is very common. One recent poll found that one in five people admit to having stolen something from a grocery store self checkout. While some argue that this number is likely an overestimate, the hard figures are pretty alarming.
For example, a study in the UK found that the average losses through self checkouts was about 4%, or two to three times higher than through traditional checkout lanes.
Building a self checkout with theft in mind is no easy task. There’s a classic episode of NPR’s Planet Money podcast on self checkout security that discusses this challenge. One main reason is that grocery stores have a lot of items, and those items have wide weight and size ranges.
This makes it hard for some traditional loss prevention systems to deal with self checkout theft. There’s an added problem. Many consumers don’t feel like self checkout fraud is theft at all. They call it “gaming the system” or “compensation for doing the grocer’s job for them.”
This can make the biggest theft deterrence ineffective: shame. Most people will feel guilty for doing something that they feel is wrong. If one in five consumers don’t even consider self checkout theft stealing, then improving the security of kiosks becomes much harder.
What are the types of self checkout theft and fraud?
The Atlantic recently reported on three main types of self checkout theft:
- The banana trick
- The pass around
- The switcheroo
The cutesy names are further evidence that self checkout thieves see it as a game.
The banana trick
The banana trick is punching in a cheaper item’s code while weighing a heavier item. This shoplifting tactic gets its name from bananas being one of the cheapest fruits.
The process is pretty simple. The shoplifter places an expensive item on the scale, for example steak, and then keys in the code for a cheaper item, such as bananas.
The pass around
The pass around method works by simply transferring some items to the bagging area without scanning them. The shoplifter scans one item and then places it along with a second expensive item in a bag at the same time.
Most self checkout systems include scales to measure the weight of scanned items. However, the variance in weight of many common items at grocery stores means that it is still possible to trick the scale into thinking no extra weight has been added to the bag.
The switcheroo
The switcheroo is a new form of one of the oldest grocery store theft scams. When shopping, the shoplifter switches the barcode of an expensive item with that of a cheaper one.
Previously, it was performed by picking a similar looking item, for example changing the code of one type of meat for another. Now, because the main self checkout security measure is a scale, it’s more important to pick items that weigh a similar amount.
This opens up the possibility of much bigger price differences between the scanned item and real product, as it becomes possible to, for example, scan tenderloin as potatoes.
Do customers think it is difficult to steal from a self checkout?
In addition to many shoplifters not considering self checkout fraud theft, they also don’t think it is particularly hard to accomplish. Loss prevention media recently performed an interview study to understand the psychology of self checkout theft.
Here are their results:
Only 13% of interviewees thought it was difficult or very difficult to steal from a self checkout. Conversely, over half of respondents considered it easy (29%) or very easy (29%) to steal from a self checkout.
How are different companies dealing with self checkout theft?
Companies are using different tactics to combat self checkout theft. A supermarket chain in Australia has begun checking every cart and receipt as customers leave the store. This has led to some backlash from customers who feel it is essentially accusing all shoppers of being shoplifters.
Here are two more examples of companies dealing with self checkout security in very different ways.
How is Walmart improving self checkout security?
Walmart has instituted a new camera system that records images of each item as it is scanned. It also presents the image on the screen to the shopper. This removes the ability of shoppers to claim it was an accidental miss-scan.
It also means the service clerk in the area can make sure that items match the image on screen. Finally, the video evidence can be reviewed at a later date to confirm the items match what was scanned.
How is Wegman’s improving self checkout security?
Wegmans had a novel self checkout system. Customers would use an app to scan items as they were taken off the shelf. They could then pay and leave without ever waiting in a line.
While highly efficient and customer-centric, the system ultimately failed from a loss prevention perspective. With shrinkage levels for self checkout customers much higher than the average, Wegmans decided to shutter the app and return to standard checkout lanes.
How do you prevent self checkout theft and fraud?
Before you abandon your self checkout plans entirely, there are ways to reduce theft and fraud. Here are some ways to improve self checkout security as part of your grocery store surveillance system.
Attentive customer service clerks
If your customer service clerks are treating paying customers as shoplifters, this can backfire. It’s important that your staff is polite and helpful and not suspicious or accusatory. In fact, it is the mere presence of staff that has the biggest impact on your self checkout security.
To reduce theft, it is important to humanize the act of stealing. As mentioned earlier, many people stealing from the self checkout see it as not really theft or just a game. By putting a face to the crime, theft is likely to go down.
Furthermore, the fact that an employee is watching will also make some think twice about their odds of getting caught. Staff doesn’t need to be intrusive, just visible, to add this level of deterrence.
Security scale
Security scales are standard equipment for many self checkouts. They weigh each item as it is placed on the baggage area to make sure it matches the product specifications in a database. Some scales even use AI to constantly update the specifications within ranges to decrease false alerts.
Security cameras
Security cameras can increase the deterrence factor of your self checkouts. When people think there is a high chance they will get caught stealing, they are less likely to attempt to shoplift.
Beyond the deterrence value of security cameras, some self checkout systems, including the ones being rolled out at Walmart, use AI cameras to match the look of items to a database of images.
By comparing the weight and image to a database, the system can better alert staff to potential discrepancies.
Video analytics software
Once you have security cameras in place, a video analytics platform can pair the video feed with the data from your self checkouts to make it easy to audit transactions for theft.
Solink’s Event Search function enables you to quickly find discount abuse, unusual purchase patterns, and more. That way you can focus on the high-risk transactions.
Solink provides the best self checkout security for grocers
Solink brings the tools you need to enhance the security of your self checkout lanes. By pairing video with POS data, you can quickly find and review high-risk transactions.
To see how Solink improves the security of your self checkouts, sign up for a demo today.
Timothy Ware |
Timothy Ware is Solink’s Content Manager. He brings over ten years of writing and editing experience to the job. When he isn’t writing about security, loss prevention, and asset protection, he’s enjoying his newest board game. His work has appeared on many B2B SaaS websites including Baremetrics, Security Today, TeamPassword, Cova, and SignTime.